After years of using a performance appraisal system in which managers were forced to bell-curve their departments and assess a minimum proportion of their employees as under-performing, Microsoft has decided to eliminate the system, after years of discontent over the political competition that the system fostered(http://online.wsj.com/news/articles/SB10001424052702303460004579193951987616572).

In the case of a tech company requiring innovation of its employees, this type of appraisal system would create an atmosphere of fear not conducive to collaboration and creativity. Whereas such a system might be deemed acceptable to sales representatives, who work mostly individually on their own accounts, and where heavy competitive office politics would be seen as a positive driver of performance, in the case of technology development such a policy would destabilize employees and disincentivize teamwork. As well, managers would lose incentive to coach and develop their current employees, instead preparing to simply fire low performers instead.

This said, bell curving can be useful in many other environments. University grade bell curving creates consistency of marks, and the removal of low-performers reduces the resource strain on the institution. Bell curving of assembly line workers would ensure that slow workers are regularly removed and replaced by potentially younger, faster workers. A careful analysis of the impact of such a destabilizing human resource policy should be undertaken in each differing workplace.

In economics class, it is regularly taught that beyond public protection and basic research, governments, because of the deadweight losses caused by taxation, can best promote economic prosperity by leaving the market alone and only intervening if threats to a competitive market (such as monopoloies) devleop.

However, in this recent TED talk: Mariana Mazzucato: Government — investor, risk-taker, innovator, the speaker points out that whereas scientists working in R&D for corporations such as in pharamceuticals and engineering do come up with great innovations, researchers at universities and in the military do too. And many technologies used commercially today were not necessarily thought of as having a commercial application when they were developed; thus, that research would be best seen as a public good which would not have existed with the market economy alone. This important recognition for government funding of research helps us realize that we need the strategic contribution of government to generate advanced development, instead of the attitude of simply reducing government, because companies will not generate everything on their own.

Large entreprise-wide IT projects are large investments with high risks, when considering the cost of development, the costs of training, and lost productivity when systems go down.

BC public schools use BCeSIS for grading. Introduced 8 years ago, the system’s cost has come to 6 times original projections. And although generally functional, the single-server system’s slow response times and significant downtime (such as multi-day maintenance immediately before my HIstory teacher’s report card deadline) has angered many. Now, the government is going to start over, with a new ConnectEdBC (http://thetyee.ca/Blogs/TheHook/2013/11/05/ConnectEdBC-to-replace-beleaguered-BCeSIS/).

UBC’s Connect system for messaging and secure assignment dropboxing has also frustrated students and professors alike, due to frequent unscheduled outages particularly at high demand times (http://ubyssey.ca/news/ubc-connect-disruptions-352/) Some professors are instead posting entirely on simple course websites.

Translink’s new Compass farecard system is due to roll out shortly. Recently, beta testing with 10000 users was conducted (http://www.theprovince.com/TransLink+busiest+compass+card+tapping+cent+testers+still+fail/8994621/story.html), and it seems the system held up, though many bugs were found. Extensive testing is a positive step which will help engineers refine the system and ensure that large failures (and the great scandals and grief of managers and politicians) are prevented. Of course, 10000 users is a very small part of the total that will be using the new system daily, so only when the system is finally released will we know whether the IT team has succeeded.

During the recent class on HR practices, higher wages and benefits were cited as an effective way to improve employee motivation and productivity. The notion of making cuts to drive performance seemed to be frowned upon, as illustrated by poorly paid call centre workers with highly proceduralized and repetitive work. However, reducing hours and pay are also frequently used when performance is below par. This lead me to attempt to see if any formal support of such an approach has been articulated.

In this article (http://www.ilr.cornell.edu/ICS/InsightsAndConvenings/upload/research-for-the-real-world-03-11.pdf), the author mentions the “delayed payment” model, in which wages are deflated for entry level, and inflated for senior level personnel, in an attempt to make employees work harder towards the inflated higher wage. The model seems to be well used in environments in which employees are closely supervised and thus performance-linked pay can be effectively implemented.

Thus, this model seems to justify lower probationary pay. However, the theory requires the existence of higher pay in senior positions in the balance. It seems that an overall across-the-board wage cut, thought to reduce costs while creating a need for people to work more, does not create the wanted motivation.

While my manager at work was joking around about light teasing in the workplace, another one reminded him that the law was now going to take it much more seriously.

Bullying in the workplace can be extremely harmful, not only impacting productivity and turnover, but more importantly hurting the victim in a long-term way. Many felt that companies have a responsibility to ensure inappropriate political behaviour does not go too far. But now, the provincial workers compensation board has explicitly mandated this responsibility, by making it possible for claims to made against employers for inadequate protection against harassment.

Under the new policies effective Nov 1st, employers now must, among other things, develop policy statements, and procedures for processing complaints, and conduct bullying prevention training.

This extension of health and safety regulations is an important step in pushing employers to create a more positive work environment, for the sake of society as a whole. Of course, in terms of enforcement, assessing whether the efforts made are adequate will be difficult, but this regulation presents a worthy attempt.

Details on the new regulation can be found at:

http://www2.worksafebc.com/PDFs/bullying/bullyingHarassmentBackgrounder.pdf

The Royal Mail, Britain’s national postal service, was recently privatized. The government argued that its IPO was necessary to modernize the service, a company which has seen profits cut drastically, as lettermail volumes continue to fall, and competitive private couriers pick up the new parcel business spawned by the growth of ecommerce, leaving the public system with little room to manoeuvre.

In Canada, Canada Post, a crown corporation, posts regular losses while continuing to provide service to all Canadian addresses. However, an IPO for Canada Post, which is currently burdened by expansive service obligations, but possesses great physical assets and a wide delivery network, could be framed very attractively for investors. Proceeds from a sale could be invested in improvements in service speed and reliability to better compete with UPS and FedEx.

However, would privatization serve the interests of Canada’s overall economy? Canada Post, mandated to serve all of Canada, subsidizes the cost of doing business with remote communities by delivering to those areas at unprofitable rates, while daily bill and cheque delivery will continue to be fundamental to many businesses for the near future. Pulling out such services, in the name of profitability, with no immediate replacement, could drastically impact rural life and fundamentally damage many business models. This critical role of the postal service must be considered before attempting to see mail as a responsibility of the free market. Could regulations protect essential mail service while still making Canada Post an attractive investment?

http://www.cbc.ca/news/world/u-k-royal-mail-service-to-be-privatized-in-coming-weeks-1.1704324

Complaints against Air Canada continue to rack up over their policy of overbooking flights. In this recent CBC story (http://www.cbc.ca/news/canada/british-columbia/couple-incensed-as-air-canada-overbooking-continues-1.1894951), this couple had family waiting for them at home assuming they would arrive on time, and so they experienced significant personal distress.

It seems the public is generally displeased with overbooking, and regard the practice as unfair. But is overbooking unethical?

Airlines are in the business of providing fixed-route scheduled travel. Though the fine print states that travel is not guaranteed, it seems reasonable to see planning to be unable to provide the promised transporation asdeceptive. But not all airlines overbook so often (for example, Westjet), so consumers can choose how much overbooking risk to take on. We should also note that, with compensation of $300 per passenger for the bump in the news story, some might even want to get bumped.

When MIT “overbooked” its MBA program (http://online.wsj.com/news/articles/SB10000872396390444083304578018610327120942), they asked for volunteers to defer and offered ‘scholarships,’ increasing in value when not enough students responded. If Air Canada asked each passenger to name their own bump compensation, and bumped those who bid the lowest, then only those who would be happy to be bumped at their price would be forced to wait. Airlines could maximize passenger loads and bumped passengers could benefit by receiving a sum determined by supply-and-demand economics.

A recent blog post from Northwestern University (http://operationsroom.wordpress.com/2013/10/03/speed-variety-tradeoffs-in-fast-food/) analyzed data on average service times at U.S. fast food chains. Reports indicated increasing times industry-wide, as restaurants trade time for an increase in variety, to differentiate their products with competitors’. When considering new labour-intensive products, the question is, at what point is the tradeoff not worth the slowdown?

At UBC, many outlets provide made-to-order service. The SUB’s Pasta Bar and Vanier’s omlette station both cook food in small frying pans, order-by-order. These outlets charge greater prices, and lines are long and slow-moving.

On the other hand, the SUB’s Pho station has cut waiting by gutting their menu into a single option: identical servings at an every-day price. The Tim Horton’s at Sauder serves the bakery and beverage line, but omits entirely the hot foods available at other locations. These operational choices cut costs and service times, growing the total customer count.

While made-to-order outlets can offer greater quality, cost and convenience matter greatly to students eating between classes. As well, customizability requires expensive training to ensure quality. If every outlet served a single selection from one super-sized pot, quantities could increase and prices might go down. The lack of variety could be compensated for by rotating menus daily. The bulk of the student population would benefit, while the university might increase profits by serving more food, given the lowered price maintains original margins. Would such a change in food service be supported by the student population?

My colleague Scott Henry (https://blogs.ubc.ca/scotthenry/2013/09/30/price-gouging/) recently posted a defense of retailers increasing prices in times of natural disasters, arguing that increased profit potential would drive increased supply of necessities to help with recovery.

Although I agree with his point of increased supply, and allocating resources to those who value it most, I would hazard against the presumption that anti-price-gouging laws are inherently wrong. While price ceilings would create economic shortages, and thus inefficiency, it would be important to remember that remarkably large price increases, even if consistent with the equilibrium, would make it impossible for many people to purchase all the goods that they need in the short term. And whereas the argument made refers to a competitive market, is a disaster zone truly a free market? Are the barriers to entry too great to call it free?

Although an increased supply would come in time, as entrepreneurs outside that geographic market realize the new opportunity, this reaction would not be immediate. For that time period before imports arrive, a oligopoly  could form, hoarding supply, and pricing goods at the profit-maximizing point, higher than equilibrium. Private profit is gained at the expense of consumers, while extra supplies sit warehoused, out of reach to the needy.

In this situation of extraordinary demand, economic actors can become poised to act not in the freely-competitive fashion, but in one that maximizes their own benefit, overstepping the guide of the invisible hand. Government intervention could be necessary.

Recently, Coca-Cola apologized for printing “You Retard” on the cap of a bottle of Vitamin Water, a premium juice/supplement product, which it did accidentally as part of a promotional initiative in which words were printed on bottle caps in both the English and French languages; “retard” means late in French.

The fallout that has ensued after the complaint of the customer, a man with an autistic daughter who took great offense to the r-word, has lead to Coke deciding to destroy and recall all Vitamin Water with the random word printing.

This is a case of a simple oversight error in editing the list of words to be printed on the bottle caps, with a significant loss of product necessary to provide the appropriate public response. The lesson learned is that such a small error can cost much more than anticipated.

However, what is also interesting to analyse the social media reaction to the incident. Online comment sections have had a great number of disparaging comments about the horrendousness of the incident, and have provided a place for the ‘haters’ to bash the inutility of Coke products, and a number of quite long and involved postings both supporting the family of the Edmonton complainant, and Coca-Cola. What Coke’s marketing team must keep in mind is that for the most part, such comments likely do not reflect the majority of reactions to the articles, which is that the mistake is simple and forgivable and the media reaction is pointless.

See related articles and comment boards:

http://www.cbc.ca/news/canada/edmonton/coca-cola-apologizes-for-offensive-bottle-cap-message-1.1861022

http://www.huffingtonpost.ca/2013/09/18/coca-cola-you-retard-cap_n_3951264.html